Assignment on microeconomics PDF
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Added on 2021-05-27
Assignment on microeconomics PDF
Added on 2021-05-27
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Running head: MICROECONOMICSMICROECONOMICSName of the StudentName of the UniversityAuthor’s Note
1MICROECONOMICSTable of ContentsQuestion1.........................................................................................................................................2Question 2........................................................................................................................................4Question 3......................................................................................................................................11References......................................................................................................................................18
2MICROECONOMICSQuestion1a)Given the Newland’s production capacity, the PPF (Production Possibility Frontier)for production of bicycles and cars are highlighted in the below diagram;01000200030004000500005000100001500020000250003000035000PPFCarsBICYCLESCARSTable 1: Production Possibility Frontier of cars and bicyclesSource: (Author’s Creation)b)The PPF curve mainly signifies maximum possible output of the two commoditiesgiven the inputs such as resources. It generally assumes that all the inputs areeffectively utilized in production (Baumol & Blinder, 2015). Few variables involvingtechnology, laborers impact the resources and thereby it shows that point where PPFlies. The PPF curve indicates two commodities production possibilities given thefixed resources. Furthermore, this PPF curve helps to determine efficiency ofproducing two goods at same time. This diagram highlights PPF for the production of bicycles and cars. The point A aswell as point B on the curve signifies that resources are allocated efficiently by a
3MICROECONOMICSparticular economy. Point B indicates that if a country starts to manufacture large numberof bicycles, then they should divert those resources which are used for producing cars. Onthe contrary, Point A highlights that if the nation starts to produce huge number of cars,then they should give up some resources for manufacturing bicycles. Moving from thepoint A to B, the economy will reduce total car production in comparison with rise intotal bicycle output. The point Y depicts that the resources are utilized inefficiently,which indicates that the economy is not producing huge number of bicycle and cars eventhough resources are given (Hall & Lieberman,, 2012). The assumptions of the PPF are illustrated below:Technology that is to be utilized in production of goods is taken to be fixedIt is assumed that resources are utilized efficientlyThe resources used for manufacturing commodities could be relocated in order tomanufacture another commodity(Taussig, 2013).Properties of the PPF are explained below:The PPF curve is basically negatively sloped since variation in amount of onecommodity is indirectly related to variation in amount of another commodityThe shape of PPF curve is mainly concave due to rise in marginal opportunitycost. c)The three major possibilities by which the Newland could meet rise in demand aregiven below:This nation could increase supply of the two commodities in order to meet thecustomer’s requirement.
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